What Is a Series LLC in Illinois: Structure, Filing, and Shield

A Series LLC in Illinois is one limited liability company that can create multiple internal divisions, called series, each holding its own assets, members, and liabilities walled off from the others. You form a master LLC with the Secretary of State, then file a certificate for each series beneath it. When the statutory conditions are met, a lawsuit or debt tied to one series can reach only that series’ assets, not the master and not the other series. The governing statute is 805 ILCS 180/37-40.¹

How the Two-Layer Structure Works

The master LLC is the entity you register with the state. Beneath it sit one or more series, sometimes called cells. Each series can hold its own property, sign its own contracts, and run its own line of business with its own members or managers. The master provides the legal architecture; the series operate with enough independence that they function much like standalone LLCs.

The real draw is the liability partition. When the statutory conditions are satisfied, debts tied to one series can only be collected from that series’ assets. They do not bleed into other series or into the master LLC’s general assets. The statute also runs the other direction: unless the operating agreement says otherwise, debts of the master LLC or a different series cannot reach a protected series’ assets.¹

The classic use case is a real estate investor holding several rental properties, each in its own series. A slip-and-fall lawsuit at one building threatens only the assets in that series, leaving the other properties untouched. The same logic works for any business that wants to isolate risk across distinct operations, product lines, or investment portfolios.

What You File and What It Costs

Formation starts with articles of organization for the master LLC, filed with the Illinois Secretary of State on Form LLC-5.5(S), the series-specific version of the standard articles. The name must include “Limited Liability Company” or an abbreviation like “LLC” or “L.L.C.” The articles must include notice of the limitation on liabilities between series. That public notice is itself one of the statutory conditions for the shield to work.¹

The filing fee for the articles is $150. Once the master exists, you file a Certificate of Designation (Form LLC-37.40) for each series you want to create, at $50 per certificate.² Each certificate requires:

A series name that contains the full legal name of the master LLC. If your master is “Midwest Holdings, LLC,” a series might be “Midwest Holdings, LLC – Rental Property 1 Series.”
The management structure, meaning whether the series is run by its members or by appointed managers.
A registered agent with a physical street address in Illinois to accept legal service.

Filings go to the Department of Business Services, Limited Liability Division in Springfield, by mail or through the Secretary of State’s online portal. Standard processing runs roughly ten to fifteen business days. Expedited processing is available for an additional $100 and typically brings the turnaround to about twenty-four hours.²

Illinois also requires LLCs to file an annual report with the Secretary of State. Failing to file can lead to administrative dissolution of the master LLC, which pulls the rug out from under every series beneath it. The master files one annual report covering the overall entity; confirm the current fee and deadline directly with the Business Services Division, since those can change year to year.

What the Operating Agreement Must Say

Illinois law makes the operating agreement the foundation of the series structure. The statute requires that the operating agreement itself provide for the limitation on liabilities between series. Without that language, the partition does not exist no matter what your articles of organization say.¹

At minimum, your operating agreement needs to:

Authorize the master LLC to establish designated series with separate rights, powers, and duties tied to specific property or obligations.
Provide explicitly that each series’ debts are enforceable only against that series’ assets, not against the master LLC or any other series.
Define each series’ business purpose, its members or managers, and how profits and losses are allocated.
Address reverse liability. The statutory default is that the master LLC’s general debts cannot reach a series’ assets, but the operating agreement can change that.

This is not a document to pull from a free template. The operating agreement is doing the heaviest legal lifting in the entire structure. Professional legal fees for a series-compliant operating agreement typically run $1,000 to $1,500 or more depending on how many series you plan to run.

Keeping the Shield Intact

Filing the paperwork is the easy part. The partition only survives if you keep meeting every statutory condition at once:¹

Each series maintains its own distinct books and records.
The assets of each series are held and accounted for separately from the master LLC and every other series.
The operating agreement contains the liability-limitation language.
The articles of organization reference the limitation on series liabilities.
Each series claiming limited liability has a filed Certificate of Designation.

In practice, separate records means each series needs its own bank account, its own ledger, and its own financial statements. Commingling funds across series is the fastest way to lose the partition. If a creditor can show money moving freely between series with no clear accounting trail, a court could treat the assets as undifferentiated, which makes them all fair game.

Illinois courts have held that poor record-keeping alone may not be enough to pierce the veil absent fraud or injustice, but that is cold comfort in a structure whose entire value depends on the integrity of the partition. Treat the record-keeping requirements as non-negotiable.

Federal Tax Treatment Is Still Unsettled

Federal tax treatment is one of the structure’s biggest open questions. In 2010, the IRS published proposed regulations that would treat each series as a separate entity for federal income tax purposes, with each series independently classified as a partnership, a disregarded entity, or an association taxable as a corporation.³

Those regulations have never been finalized. As of 2026, they remain proposed, which creates genuine uncertainty. In practice, most tax professionals advise treating each series as a separate entity and obtaining a separate Employer Identification Number for any series with employees or its own tax obligations. If a series needs to elect a specific tax classification, it can file Form 8832 on its own.⁴ A series electing S corporation status would file Form 2553 instead.

The statute does give the master LLC and its series the option to consolidate operations as a single taxpayer to the extent permitted under applicable law.¹ Given the unresolved federal guidance, a tax professional with specific series LLC experience is worth the cost. Getting the reporting wrong from the start creates headaches that compound every filing year.

When the Shield May Not Travel

If a series does business in a state that has no series LLC statute of its own, the liability shields between your series may not be respected by that state’s courts. This is unsettled law, and the uncertainty should factor into your planning if any series will operate across state lines.

The arguments for recognition rest on two doctrines. The Full Faith and Credit Clause generally requires states to respect another state’s laws. The Internal Affairs Doctrine suggests that the law of the state of formation should govern an entity’s internal structure. Both have exceptions. A non-series state could decline to honor the shield if it considers the concept contrary to its own public policy, or if a court decides that a third-party tort or contract claim is an external matter governed by forum-state law rather than Illinois law.

Roughly twenty states and the District of Columbia now have some form of series LLC legislation, which reduces the risk in those jurisdictions. If a series will hold property or conduct significant business in a state without series LLC laws, forming a standalone LLC in that state may be the safer path.

Banking Can Be the Hardest Practical Step

Opening bank accounts for individual series is often harder than opening them for a conventional LLC. Many banks are unfamiliar with the structure and do not know how to set up accounts for an entity that is not independently registered in the traditional sense. Expect to bring your articles of organization, your operating agreement, the Certificate of Designation for the specific series, and the EIN for the series or master LLC. Some banks will also ask for a certificate of good standing from the Illinois Secretary of State.

If a bank pushes back, a legal opinion letter from your attorney explaining the series’ status under Illinois law can help. Credit unions and regional banks sometimes handle these requests more smoothly than national chains, which tend to have rigid intake systems. Shop around before assuming you need to restructure.

The flip side of the structure’s efficiency is that it demands more internal discipline than a single LLC. Each series needs its own records, contracts executed in the series’ name, and clean documentation of which assets belong where. The savings from avoiding multiple state filing fees evaporate quickly if sloppy bookkeeping leads a court to disregard the partition that was the whole point.

1
Illinois General Assembly. Illinois Compiled Statutes 805 ILCS 180/37-40
2
Illinois Secretary of State. Limited Liability Company Publications and Forms
3
Federal Register. Series LLCs and Cell Companies – Proposed Rule
4
IRS. Form 8832 Entity Classification Election